Standing Committee B

[Mr. Roger Gale in the Chair]

Proceeds of Crime Bill

Clause 246 - ''Unlawful conduct''

Amendment proposed [11 December]: No. 366, in page 145, line 26, to leave out the words 
'on a balance of probabilities',
 and to insert the words 
'to the standard applicable in civil proceedings.'.—[Mr. Grieve.]
 Question again proposed, That the amendment be made.

Dominic Grieve: On a point of order, Mr. Gale. We still do not have the Hansard report of our proceedings on Tuesday afternoon. It was not available yesterday and I understand that it is still at the Stationery Office. I appreciate that such matters may be outside your powers, but such a situation is inconvenient, especially when we have a split debate. We are in the middle of discussing a substantial clause, so the ability to refer back to what was said previously is important.

Roger Gale: That point was well made, and I shall take it up with the authorities in the House.

Bob Ainsworth: Good morning, Mr. Gale. Having laboured for so long on the Bill and knowing how much that hope is required at this time on a Thursday, I wish to point out two matters to the Committee: this is the last time this year that we shall meet at this hour on a Thursday; and my hon. Friend the Member for Stirling (Mrs. McGuire), the Whip, informs me that we are halfway through the Bill. I wanted to make sure that I named her in Committee in case her figures are wrong. Christmas is coming and some respite from our labours approaches.
 As the hon. Member for Beaconsfield (Mr. Grieve) said, we are in the middle of a debate and some important issues have been raised. It is difficult to recall everything that was said during our previous sitting, but I am sure that members of the Committee will not be slow to remind me if I fail to address substantial issues that have been raised. 
 The amendment would mean that the court would have to decide on the civil standard of proof—not on the balance of probabilities—whether matters alleged to constitute unlawful conduct have occurred or whether a person intended to use cash in unlawful conduct. The balance of probabilities is the normal standard of proof applicable to civil proceedings. However, some limited civil proceedings attract the criminal standard. The amendment would therefore make the position less clear than under the current formulation of 
''on a balance of probabilities''.
 We discussed such matters when we debated part 2. Our opinion then on how matters should apply in the proceedings is no different now. The present wording gives a far clearer steer to the courts of what Parliament expects from the level of proof required under part 5.

Nick Hawkins: Although the Minister is saying that the clause sets out the conventional way in which the Government prefer to deal with such matters, he has not given sufficient weight to the powerful speech made on Tuesday by the hon. Member for Redcar (Vera Baird). She has enormous experience and far more legal seniority than other members of the Committee. Given her powerful speech in which she supported my argument and that of my hon. Friend the Member for Beaconsfield and other Opposition Members, I should have thought that the Minister would have given more credence to what she said.

Bob Ainsworth: Well, the time is 8.59, a point of order has been made, I have just started speaking, and the hon. Gentleman has intervened. If he gives me the opportunity, I might do exactly as he suggested. I recall my hon. Friend's speech and I picked up on a couple of points that she made. I respect her capacity, ability and experience in dealing with such matters. She should be listened to seriously, as should other members of the Committee.
 Clause 246 sets out the standard of proof that is to apply in civil recovery and cash forfeiture proceedings to determine whether unlawful conduct has occurred or, in the case of cash, is intended to occur. Subsection (3) deals only with the standard of proof that applies to proving unlawful conduct, not all other issues that must be proved in part 5 proceedings. That is because, since part 5 proceedings are civil proceedings, it is considered to be self-evident that the civil standard of proof applies.

Dominic Grieve: The Minister says that the proceedings are civil proceedings. I accept that that is the way in which part 5 is headed. However, does he agree that elements of that recovery process do not bear the normal hallmark or stamp of civil proceedings? For example, is there a limitation period in respect of the time in which property can be recovered? My understanding of part 5 is that there is not.

Bob Ainsworth: The hon. Gentleman is not right. There is provision for a limitation period in the proceedings. Although he and other members of the Committee may be more familiar with the normal situation than I am, there is a 12-year limitation period, and I believe that that is not out of line with the normal situation. If it helps the hon. Gentleman, the provision can be found under clause 287.
 The only area in which there could be any doubt is in relation to unlawful conduct, since that is defined by reference to the criminal law. Subsection (3) is designed to overcome that element of doubt. It provides that the test will be the balance of probabilities, which is the normal standard of proof applicable to civil proceedings. We discussed that issue in some detail in our consideration of part 2. The same arguments apply here. The phrasing used achieves what we intend in a way that a reference to the civil standard would not, because some civil standard proceedings attract the criminal standard of proof requirement. 
 The standard that normally applies in civil proceedings is, however, the balance of probabilities. It is the standard that applies in other proprietary proceedings under the civil law. It is therefore appropriate that it should apply to civil recovery and cash forfeiture. It is not appropriate for there to be any possibility that the criminal standard should apply, because both civil recovery and cash forfeiture are civil proceedings. They do not, and cannot, lead to a conviction. 
 During our consideration of part 2, I quoted the comments of Lord Nicholls in the case of Re H in 1996. He made it clear that, when assessing the probabilities, the court will have in mind that the more serious the allegation the less likely it is that the event occurred. With that in mind, the court should expect stronger evidence before concluding that a more serious allegation is established on the balance of probabilities. At the moment, my hon. Friend the Member for Redcar is not in the Committee. On Tuesday, she said that the standard that we were proposing was rigid. I bow to her expertise. None the less, I know of people with similar expertise who take a different line. 
 For example, I have heard the views of a senior judge and, if the Committee would like, I can quote chapter and verse on how he explained the workings and the wordings of the balance of probabilities. I see that the hon. Member for Orkney and Shetland (Mr. Carmichael) is protesting that I should not do that, but it is not my understanding that the standard is rigid. It is flexible, as the judge explained in the case to which I referred. It moves, in terms of the seriousness of the offences that people are facing. In civil recovery proceedings, the burden will be on the director to prove that, on the balance of probabilities, the property was obtained through unlawful conduct. If the court thinks that it is more probable than not that the claim against the respondent is true, the burden of proof is discharged. 
 On Tuesday, the serious point was made that we are not discussing cases that involve two equals, as is usual in civil recovery proceedings. In these civil recovery cases, the state is against the individual. That is undeniably true, but I remind the Committee, as it considers that inequality, that we are not talking about situations that may apply under part 2. We are not talking about the granny with the telly in the drawing room of her Scottish council flat. The director will not get involved in expensive civil legal proceedings unless, as the steward of the resources given to him, he can show that he is using those resources well. He will be sure to target substantial sums of money and serious criminals. 
 If we are to have a balanced view, we must remember that it is for the director to prove on the balance of probabilities that the property is the proceeds of crime. The defendant knows the origin of the property; it is for the director to find out and prove that the property is the proceeds of crime. That fact must be put on the scales when considering the potential imbalance that hon. Members said would arise because one of the parties is the state. The defendant is in an advantageous position in that respect.

Dominic Grieve: The Minister's argument would have considerable force if that were the position. He courteously wrote me a letter, which I hope that other members of the Committee have seen, in which he details the difference between the powers for civil recovery and confiscation. Civil recovery proceedings can extend to include property that was innocently acquired but has an origin that places it in the category of property acquired by unlawful conduct. The Minister is not right to say that the defendant will know the origin of the property. There may be circumstances—although I hope that they would be unusual if the director was bringing proceedings—in which the person whose property the state is trying to recover would have no idea of the property's unlawful origin.

Bob Ainsworth: Yes, but that is not what I said. I am sure that this debate will continue throughout part 5. When we discuss the safeguards in clause 306, the hon. Gentleman will wish to explore whether those safeguards are adequate. The person will know where they gained the property, even if they do not know how the individual who passed that property on to them gained it. The person will know that if they gained the property innocently and paid its full value, it is not forfeit.
 The hon. Gentleman may raise interesting issues that we need to explore, but they do not contradict my point. The defendant will be aware of how he gained the property. The director has only the information that comes to him in the course of his investigations to discover and prove the origins of the property. There is no reverse burden in part 5. The burden remains on the director, albeit to the level of the balance of probabilities. 
 There is nothing more that I can say, other than that I do not believe that it is appropriate to change the wording in the Bill as the amendment would do. Opposition Members cannot undo the fact that the Bill uses the words, 
''on a balance of probabilities'',
 so they are proposing something different. If their amendment were accepted, and we replaced the balance of probabilities with the civil standard, we would send the courts the clear message that we want a higher standard or the criminal standard to apply in certain circumstances. We should avoid that confusion. We need to stick with the wording in the Bill, which is clear. It is the normal civil standard of the balance of probabilities, and I would resist lifting the hurdle for the prosecution in proving its case.

Dominic Grieve: I am grateful to the Minister for his sensible approach to the issue and for appreciating that it is important. I am mindful of the fact that simplicity can help with the administration of justice. He wants to send out a simple message that the court should apply the civil standard of the balance of probabilities. He believes that the procedure of civil recovery will be fair and that the sort of cases to which I referred are unlikely to arise, because the director will not use his discretion to target such property. Nevertheless, I still take the view that a fundamental issue of importance is involved because of the nature of the power that we are giving the state.
 It is perhaps unfortunate that this debate has had to take place so early in our consideration of part 5. I am the first to admit that the more I read part 5, the more it raised questions and anxieties in my mind. I shall make a point now in a nutshell and will amplify it when we debate subsequent amendments. 
 As the procedure is described as a civil recovery procedure, some might believe that the state is being placed in the same position as an individual pursuing a case against another individual for tortious interference with his goods and chattels, the only difference being that the victim would have priority and that the state is in reserve behind, arguing that, notwithstanding the fact that no identifiable victim will bring proceedings to recover the money, the state as a matter of public policy is placing itself in the victim category in order to bring civil proceedings to recover property. 
 In fact, however, on reading through the part, it becomes apparent that that is not what we are doing. It is true that many elements in the wording of the part are similar to those of the rules in tort in bringing an action to recover property against an individual. We shall discuss those later, so I shall not detain the Committee on the matter now. However, other elements are quite different. 
 When I asked about the limitation period, the Minister informed me that it is 12 years. However, unless I am mistaken, 12 years is the limitation period that I would expect for fraud and certain other actions, but a straight action for tortious interference with my goods and chattels would have a six-year limitation period. I highlight that as an area in which the state is taking more powers. There are further areas in which we consider receivers. The state is taking on powers within receivership that are wholly different from those that an individual would have when bringing an action. An individual may get injunctive relief to prevent the disposal of assets, such as a Moreva injunction, but his powers will be more circumscribed than those of the state.

Ian Lucas: Is not the Assets Recovery Agency's position in these proceedings similar to that of Customs and Excise and the Inland Revenue when they proceed to recover sums that are due under tax legislation?

Dominic Grieve: The hon. Gentleman is almost certainly right. We have a hybrid that combines the powers that state enforcement agencies have had in limited areas to recovery money due by law with the principles of tort that allow an individual to sue another individual for the recovery of property that was unlawfully obtained. I have read the clauses of part 5, and I reread them last night. I thought that the two concepts were mixed.

Ian Lucas: Is not the procedure not entirely novel but close to that followed in connection with matters that are not, strictly speaking, unlawful conduct? The state already proceeds through the Inland Revenue and Customs and Excise in similar cases.

Dominic Grieve: I take the hon. Gentleman's point, but in the two cases that he cited—Customs and Excise for VAT and the Inland Revenue for tax—the law of the land says that there is a legal obligation on an individual to pay tax or VAT. Failure to do that may be a criminal offence, but both organisations may use civil recovery.
 The unusual aspect of part 5 is that it would create a new category of civil wrong: possessing assets that were unlawfully obtained, or ''obtained through unlawful conduct'', as the Bill says. I make a point from the letter that the Minister wrote to me—it was helpful and made the point crystal clear—that such assets include those that have not necessarily been unlawfully obtained by the unlawful conduct of the person against whom the action is directed. 
 Philosophically, the concept is novel, because the state does not lose anything. That is unlike under tax or VAT law, because in those circumstances, the state has a legal right to certain assets that it has not obtained. In this case, the state has no contractual or existing legal right to the assets. The state has decided that it wants the Government to ask Parliament to pass legislation to provide that proceeds of unlawful conduct should be forfeited to the state as an issue of public policy. The state can bring a civil action to achieve that against not only the person who obtained the assets but, more pertinently, any person who possesses the assets, subject to reservations.

Bob Ainsworth: I apologise for intervening before the hon. Gentleman moves his argument further—I am not trying to break his train of thought. He assumes that we based civil recovery on tortious interference rather than a victim's proprietary claim. His point that the time period should be six years rather than 12 is not necessarily the case.

Dominic Grieve: Perhaps I did not catch the last part of the Minister's contribution. He said that this was not based on tortious interference with goods but on—

Bob Ainsworth: On the victim's proprietary claim.

Dominic Grieve: But it is a feature of the legislation that, in many cases, the property is the proceeds of unlawful conduct when there is no victim. That must be right. In 1994, my house was burgled, and various chattels were taken from it. The following day, I went down the road and succeeded in finding out where they had gone. I told the police, and half of them were recovered. The other half were never recovered and I toyed with the idea of bringing civil proceedings against the individual concerned. That is a crime in which assets have been obtained and there is a victim—I have lost something. In many cases of unlawful conduct, however, there may be no identifiable victim in a position to bring an action.

Bob Ainsworth: An identifiable individual.

Dominic Grieve: If the proceeds of unlawful conduct are a stash of £1 million as a result of the sale on the streets of heroin, no individual will have a private right of action to recover that money.

Bob Ainsworth: But the hon. Gentleman cannot claim that there is no victim of serious and organised crime. Society as a whole is a victim of such crime. The basis and justification for taking these actions is that they are proportionate to the problems that society faces, and society needs to be protected from such activity, which is extremely lucrative.

Dominic Grieve: The Minister must excuse me if I have expressed myself in such a way that he felt he had to make that intervention. Of course I appreciate that the basis of the legislation is precisely what he said. That is one of the reasons why we are prepared to support it. It is not a question of the state, the Government, or whatever word you want to use to describe it—

George Foulkes: It is not the state.

Bob Ainsworth: The agency.

Roger Gale: Order. First, I do not want to describe it at all. Secondly, it is very difficult for Hansard reporters to produce an accurate record if hon. Members make sedentary interventions.

Dominic Grieve: We shall talk about the Government. The Government are not placing themselves in the same position as an aggrieved party bringing a claim in tort for somebody having taken their assets. One of the reasons for that is that their claim extends more widely. It does not extend only to assets in relation to which there is an identifiable victim but assets that have been obtained by unlawful conduct, in relation to which the Government say that society has been the victim. That may help the Minister in terms of a community of approach between the two of us.
 I do not accept—I do not want to drift too far from the point on which I started—that one should approach the matter on the basis of its being a civil procedure, in which case the balance of probabilities should apply, as that is the normal civil standard. As the Minister agreed during our debate, there are several areas in which the courts, in civil proceedings, have had to look at conduct that is different from ordinary civil disputes between individuals. It is precisely in those areas that the court has had a tendency, by discretion, over time, based on particular cases that it must consider, to introduce a more variable test, depending on the particular facts of each case. 
 In asking the Committee to alter the balance of probabilities to the civil standard of proof, I am asking it to give that measure of discretion and flexibility to the judiciary, in view of the unusual nature of the powers that will be conferred on the Government. It is as simple as that. It is unlikely that the amendment would substantially alter the recovery agency's ability to confiscate assets. However, the proceedings that we are creating are unusual, and the amendment would provide a protection that takes that into account. 
 I am not convinced that we are talking about civil recovery. It was commonly assumed that the Government were putting themselves in the position of an ordinary litigant, but that is not the case. The powers that are being given are administrative law powers. As the hon. Member for Wrexham (Ian Lucas) rightly said, they are similar to the powers of the Inland Revenue and Customs and Excise. However, those powers are being given in a context in which the origin of the targeted assets cannot always be as precisely traced to wrongdoing as can the assets that are dealt with by the Inland Revenue and Customs and Excise, because, as I have said to the Minister—and as he, tellingly, states in his letter—the provisions in part 5 can bite far beyond the individual who has obtained proceeds by unlawful conduct. They can bite on an innocent individual—albeit with reservations—and that is why it would be right to introduce the civil standard of proof. 
 If I do not ask for the matter be put to the vote now, I will not be able to do so later. My concern about the matter might lessen, as our examination of part 5 progresses. If that happens, I will inform the Minister—and we might not need to return to the matter on Report. However, at the moment, based on what I have seen of this part of the Bill, it is right that we should put it to the vote, and I invite the Committee to approve the amendment.

Nick Hawkins: I did not originally intend to add to my hon. Friend's cogent and powerful explanation of the reasons why we should vote on the matter, but I wish to make two points.
 First, I am delighted that we have been joined by the hon. Member for Redcar, who made a powerful speech on Tuesday in support of Opposition Members' arguments. 
Vera Baird (Redcar) rose—

Roger Gale: Order. I was under the impression that the hon. Member for Beaconsfield was giving way. If he had in fact finished speaking, the Committee should be aware that the Chair will not normally call a speaker after the winding-up speech.

Nick Hawkins: On a point of order, Mr. Gale. My second point is that, while my hon. Friend was speaking, I opened a detailed note from the Minister, which has been copied to all Committee members, and which has a bearing on the matter under discussion. I do not know whether my hon. Friend has seen it yet, but it contains new information, and it is dated 11 December.

Roger Gale: On this occasion, I am prepared to allow the hon. Gentleman to speak. However, the Committee must understand that, in future, once the winding-up speech is concluded, I will not allow another hon. Member to be called.

Nick Hawkins: I am very grateful, Mr. Gale. I have only one copy of the letter, but I will share it with my hon. Friend in a moment. The letter is addressed to Mr. David Williams, who is the vice-chairman of the technical committee of the Chartered Institute of Taxation.
 I state at the outset that I do not wish to criticise the Minister, who has sent out every piece of relevant information to all Committee members as soon as possible. I first saw the letter in today's post—I do not know whether other Committee members have seen it yet. It foreshadows a meeting that—I understand from the covering letter—the Minister is due to have with the Chartered Institute of Taxation's technical committee on 17 December, and it addresses some of the institute's concerns about this part of Bill. Once my hon. Friend and I have had the opportunity to examine the letter fully, there will be time to return to the matter. The importance of the letter is that draft guidance is being supplied to the Chartered Institute of Taxation, which Committee members can look at, and, in particular, detailed proposed guidance by the Secretary of State to the director of the Assets Recovery Agency on the circumstances in which civil recovery will be used. Because we are concerned about the standard of proof that should be used—and, as my hon. Friend the Member for Beaconsfield rightly says, we may not get another chance to examine the issue—it is important to draw the Committee's attention to one particular aspect under the heading of civil recovery. 
 The draft guidance states: 
''It is envisaged that the circumstances in which law enforcement agencies will refer cases to the Director for possible civil recovery action will include the following''—
 the most relevant of which seems to be when— 
''(c) a person has been acquitted of a specific offence charged in criminal proceedings, but there is compelling evidence that some of his assets were nonetheless derived from unlawful conduct by himself or others and there is no lawful explanation for their acquisition.''
 We are therefore talking about circumstances in which there has been a criminal case, but, as a result of decisions, the state—I make no apology for calling it that, as that is what it is—decides that it wishes the director to move from the criminal proceedings and use the new civil recovery powers. In that context, I feel that our case that the balance of probabilities is not high enough is reinforced. It is question of the state saying ''We'll have a go on the criminal side, and if we fail, we'll use these new powers as a back-up.'' That is precisely the concern expressed by my hon. Friend the Member for Beaconsfield and I, and by other hon. Members. We do not oppose the arrangement in principle, but careful attention needs to be paid to how such a draconian power is used.

Bob Ainsworth: I want to make a couple of points to the hon. Gentleman. First, the guidance has been shown to the Committee—there is no new and detailed guidance other than that which has been distributed to the Committee. We had this debate before the one that we are now having on the balance of probabilities. It is not a new issue that has just come to light. We had exactly this discussion in relation to the previous amendment, on which we have not yet voted.

Nick Hawkins: I accept what the Minister says entirely. If the guidance is what we have seen before, I apologise. It was presented in the covering letter as something new that had been given to the Chartered Institute of Taxation, and I had taken it as a further development. As the Minister appreciates, I only opened the letter while my hon. Friend was speaking. It is therefore difficult for me to double check.
 My point is that if, initially, there are criminal proceedings, and the state fails, and the new powers are used as a backstop, the concerns that we expressed, which are shared by the hon. Member for Redcar, would be reinforced. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 12.

Question accordingly negatived. 
 The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendment proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause, as amended, stand part of the Bill. 
 Question agreed to. 
 Clause 246, as amended, ordered to stand part of the Bill.

Clause 247 - ''Property obtained through unlawful conduct''

Dominic Grieve: I beg to move amendment No. 380, in page 145, line 31, leave out
'(whether his own conduct or another's)'.

Roger Gale: With this it will be convenient to take amendment No. 381, in page 145, line 32, at end insert
'(1A) No person who is a bona fide purchaser for value of property without notice that such property was obtained through unlawful conduct, shall he held to have obtained property through unlawful conduct.'.

Dominic Grieve: The clauses are closely linked. We are considering property that is obtained through unlawful conduct. During our debate on Tuesday, I told the Minister that I was a little puzzled by the impression conveyed in the explanatory notes, which is also reflected in his letter to David Williams, the vice-chairman of the technical committee of the Chartered Institute of Taxation. There is an underlying assumption that the person against whom proceedings will be brought will be the person who has obtained property through unlawful conduct. I am trying to find the particular place in the Minister's letter to which I want to refer.

Roger Gale: Order. While the hon. Gentleman is finding the part of the letter to which he wants to refer, I want to bring a matter to the attention of the Committee. I appreciate that the Minister made every effort to ensure that members of the Committee received a copy of his letter. The hon. Gentleman is about to quote from an official document, in the sense that it is a letter from the Minister, and I am worried that, given the present postal situation, not all members of the Committee may have received it. If such documents are to be circulated at relatively short notice and likely to be debated in Committee, copies should be available in the Room.

Dominic Grieve: I am grateful to you, Mr. Gale. I apologise for delaying our proceedings.
 Paragraph 14(c) of the Home Office note says: 
''a person has been acquitted of a specific offence charged in criminal proceedings, but there is compelling evidence that some of his assets were nonetheless derived from unlawful conduct by himself or others and there is no lawful explanation for their acquisition. The law enforcement and prosecution authorities would consider carefully before making a referral to the Director following an acquittal. Were they to do so, institution of civil proceedings would not constitute a breach of the prohibition on subjecting defendants to double jeopardy, because civil recovery will not be a penalty but a means of recovering from a respondent property that has been unlawfully acquired (or property representing property that has been unlawfully acquired) and to which they are not entitled.''
 That reinforces the impression conveyed by the explanatory notes, but the nub of the civil recovery procedure is to be aimed at individuals who have unlawfully acquired such property. The Minister's letter of 12 December, which I received yesterday, and a careful reading of part 5, show that the nature of the power being given to the state goes wider than that. It also includes the recovery of assets that may have been acquired innocently by the individual against whom the action is being brought. The Minister made that clear in his letter to me, in which he discussed the relationship between confiscation and civil recovery. 
 The Minister's letter of 12 December explained that the two powers of confiscation and civil recovery are not identical and that the powers of civil recovery go further because they include the category of taking assets away from a person who has done nothing wrong but possesses assets that were previous acquired through unlawful conduct. That category would not involve confiscation proceedings. 
 I quote the nub of the passage, which is paragraph 10: 
''In these circumstances, we have a sum of money which is in the possession of the respondent, which has been excluded from the confiscation order but which can nevertheless be shown to constitute the proceeds of unlawful conduct—namely, unlawful conduct by the third party. Such property ought in our view to be recoverable. As I explained yesterday, and as the explanatory notes make clear (eg the note on clause 302), the enforcement authority will be able to follow recoverable property as it passes from hand to hand. Civil recovery will not be restricted to respondents alleged to have committed the unlawful conduct through which property was originally obtained. This tracing process is perfectly normal in civil property law and is essential for the effectiveness of civil recovery.''
 The letter continues: 
''The respondent may seek to take advantage of the civil defences provided in Part 5, but the High Court may decide that the defences do not apply. In particular, the civil recovery scheme prevents recovery of property from bona fide purchasers for value, but the respondent may have received the money from the third party otherwise than for value. There is also a 'bona fide change of position' safeguard in clause 267(3)(b), under which a person who receives proceeds of crime in good faith otherwise than for value may be allowed to retain some or all of the property if the court is satisfied that he has taken steps on the basis of his possession of the money as a result of which a recovery order would cause him to suffer disadvantage and that it would be unjust for the order to be made. But if the respondent has not taken any such steps''—
 this is quite interesting— 
''and there are no ECHR reasons to prevent recovery, the court will see no reason why the money should not be recovered by the Director.
Your amendment would have the effect of excluding the possibility of civil recovery in cases of this kind, where it seems to me that civil recovery would in principle be justifiable.''
 The Minister wrote the letter to me in the context of the debate that we had about amendment No. 356. It certainly influences my view of what we should do about that amendment. However, the helpful letter highlights the contrast between civil recovery and confiscation and the surprising nature of the civil recovery powers. That is what I wanted to examine by tabling my amendments to clause 247, to which I turn. 
 Clause 247 defines what constitutes property that is obtained through unlawful conduct. I do not want to read the clause out—it is not that easy to read, which is why I may have misunderstood it when I first examined it, especially when I linked it to the explanatory notes. I understand that the clause provides that property shall be held to be property obtained through unlawful conduct if it was unlawfully obtained by any person, and not only the person against whom the proceedings are being brought. 
 I am aware that later in part 5 reservations and protections are provided, particularly in clause 306, which relates to the bona fide purchaser for value without notice, and in clause 267, which relates to the person who has innocently come into possession of property. However, I worry that the definition of 
''property obtained through unlawful conduct''
 is much too wide. 
 It never crossed my mind that one could say that a bona fide purchaser for value without notice was in possession of property obtained through unlawful conduct. I had always taken the view, applying my experience of the law of tort, that, notwithstanding the property's origins, once it was in the hands of a bona fide purchaser for value without notice, it changed its complexion and became legal property.

Ian Lucas: With all due respect, is it not right that if someone acquires in good faith a motor vehicle that turns out to be stolen, the motor vehicle reverts to its original owner? Therefore, the property would be taken from the person who acquired the vehicle for value in good faith.

Dominic Grieve: The hon. Gentleman makes an interesting point, but it contrasts with my example, in which the property acquired by a bona fide purchaser for value without notice cannot be recovered. I do not know whether he wants to intervene again, but I am prepared to discuss the subject. The example of a motor car might be unusual. That is not to say that there may not be other unusual examples, but we may have to differentiate between stolen property and property that is not stolen.
 As I said to the Minister earlier, we are not necessarily dealing with stolen property. Property obtained through unlawful conduct includes assets that have been acquired unlawfully, perhaps by theft, fraud or dishonest representation. However, property may also have been acquired with the profits of illegal activity. In that case, it is not stolen property at all.

Ian Lucas: I am somewhat puzzled by the distinction drawn by the hon. Gentleman. ''Unlawful conduct'' is perhaps a difficult phrase in this context. ''Criminal conduct'' is a more appropriate phrase in some senses. We are talking about the proceeds of criminal conduct, and that phrase would helpfully set out that that is the sort of property on which we are concentrating. The Bill is directed at criminal conduct. The hon. Gentleman may concede that property that is acquired as a result of criminal conduct is closely analogous to the motor vehicle that I mentioned.

Dominic Grieve: That is a most helpful intervention, and there is much sense in what the hon. Gentleman says. When matters arise in Committee, I go away and draft amendments, sometimes late at night, to try to initiate discussion. When we discussed amendment No. 356, I was concerned about the nature of the powers granted and the extent to which we were branding a person as having property obtained through unlawful conduct, when the fault may lie with the wording of part 5.
 The hon. Gentleman is right. We are dealing with a general power that allows the state to search for property that has been acquired as the result of criminal conduct, and those searches can be targeted not only at the criminal but at anyone who possesses such property, however innocent they might be. That is not clearly described in the introductory section of part 5, which suggests that the power is intended to target criminals who possess unlawfully acquired property that cannot be recovered under criminal law. The Minister might wish to consider whether that description accurately explains what the Government are trying to do. 
 I am concerned that individuals might be tarred or tainted with criminality because proceedings have been brought against them, when they are wholly innocent of any wrongdoing. The proceedings should not be aimed at bona fide purchasers for value without notice of property that might have had a tainted origin. Subsequently, such people are specifically excluded from recovery—even though they are tainted with possessing property that has been obtained through the unlawful conduct of someone else. 
 That is why I drafted amendment No. 381. It is not merely an exercise in semantics. It removes the bona fide purchaser from the category in clause 306—where he is simply an individual who has had a finding against him that he possesses property that has a tainted origin, and who escapes recovery because he is a bona fide purchaser—and places him in a category where the proceedings cannot be brought against him in the first place. 
 I have another concern, which I will address again when we discuss further relevant amendments, such as those dealing with hearings in chambers. I am concerned about the impact that this type of proceeding—brought by the state—might have on individuals who innocently possess tainted property. Such proceedings might brand them as criminals, even if they entirely escape the recovery provisions because they innocently acquired the property—or they might have to give back some or all of it because, although it was innocently acquired, they were not a bona fide purchaser for value. 
 That is the area that I want the Committee to focus on—and it might wish to do that this morning. I will not take the matter further, as the amendments under discussion are probing amendments, but it should be addressed, because there is a compelling argument that the legislation should have nothing to do with bona fide purchasers for value without notice. They are specifically excluded under the recovery provisions, and yet they are included as potential targets for proceedings—and they can escape from them only at the end of the process. If amendment No. 381 were accepted, it would not be possible to bring proceedings against them in the first place. Fairness and equity—and what I have always assumed to be the normal principles of law in this country—lead me to believe that they should not be targeted at all. 
 Amendment No. 380 was designed to explore the issue of conduct. I tabled it before I received the Minister's letter about amendment No. 356.

Norman Baker: I am closely following the hon. Gentleman's argument, but I do not understand why the provisions in clause 267(4)(a) do not address his concerns.

Dominic Grieve: I apologise to the hon. Gentleman for not explaining the matter sufficiently clearly, and I also apologise to you, Mr. Gale, for widening the debate, but it is necessary for the purposes of the amendment.
 Several clauses in part 5 fetter the ability to recover property, even when the property has been found to have been originally obtained through unlawful conduct. The most compelling is clause 306, rather than clause 267—rather a long way ahead; I found it slightly odd that, considering its importance, it had been parked quite so far in—which provides protection to the bona fide purchaser for value without notice. Clause 306, which is entitled ''General exceptions'', provides that if 
''a person disposes of recoverable property, and . . . the person who obtains it on the disposal does so in good faith, for value and without notice that it was recoverable property,
the property may not be followed into that person's hands and, accordingly, it ceases to be recoverable.''
 Ostensibly, that covers the stolen motor car, in terms of the state's ability to recover it. 
 Clause 267 is slightly different. It provides a mechanism of protection for a person who has obtained the property innocently. However, clause 267(4)(a) must be read in conjunction with paragraphs (b) to (d): each of the conditions in clause 267(4) must be satisfied.

George Foulkes: Does the hon. Gentleman accept that he is getting mired in the detail? The point that the hon. Member for Lewes (Norman Baker) makes is that in making all his points the hon. Member for Beaconsfield forgets about all the subsequent qualifications, including the one that the hon. Member for Lewes mentioned. He talks as though there were no further qualifications.

Dominic Grieve: I hope that the Minister will forgive me. On the point made by the hon. Member for Lewes, I detected and presupposed a protection in clause 267(4)(a). However, the matter is much more complicated than that. If the matter were simply that the respondent obtained the recoverable property in good faith, and that were a complete protection, that would be an extremely powerful and wide protection. One has to read all the clauses to find out that in fact property that has been obtained in good faith can be removed from people. It will not be removed only if all the conditions in clause 267(4)(a) to (d), which we shall discuss later, are fulfilled.
 The Minister makes a good point. Looking at the wording of part 5, a series of protections are provided. However, those protections do not protect people from the initiation of proceedings or from property that they hold being treated as property that was unlawfully obtained. I do not believe that this is purely an exercise in semantics. I am surprised that a bona fide purchaser for value without notice could go through proceedings that end with his being held to have proceeds of unlawful conduct in his possession. 
 We have heard a little about the limitation period, which imposes an extra fetter. Most of us, I suspect, have in our possession property that may at one time or another have been the result of unlawful conduct. It would be surprising if we did not. The protection of the 12-year limitation period is a help—I have property in my possession at home that comes from the sack of the imperial palace at Peking. I am not sure whether that constitutes property obtained by unlawful conduct, but by certain criteria it might be said to do so.

Alistair Carmichael: The Elgin marbles.

Dominic Grieve: That involves a different issue, because the firman of the emperor, in Istanbul, provided legitimacy for the removal by Lord Elgin of the marbles, although that, too, is arguable. However, it is a valid point. If it were not for the limitation period, that might be an issue.
 Might it not be better to exclude the bona fide purchaser for value from being a person who can be categorised as holding property obtained through unlawful conduct? His obtaining was plainly not through unlawful conduct. If historically the property originated from unlawful conduct, that makes no difference, because it cannot be recovered from him.

Ian Lucas: Can the hon. Gentleman clarify what he regards as deficient about the safeguards contained in clause 306? That is the nub of whether his amendment is a good one.

Dominic Grieve: The nub of my anxiety about clause 306 is that it appears to make a concession—I accept that that is what it boils down to—on the ability to recover, rather than excluding that person from the category of people against whom proceedings can be brought. I accept that ultimately, one might ask what the difference was—but I worry about giving powers to the state to bring proceedings against individuals when, on a theoretical and philosophical basis, proceedings should not be brought or even contemplated. In those circumstances, when someone is a bona fide purchaser of property for value without notice, the property is renewed—it becomes something different—and it is his. Therefore, it should not even be a contemplated target for proceedings.

Bob Ainsworth: The hon. Gentleman has just said that proceedings should not even be contemplated. Is he saying that if someone says that they were a bona fide purchaser for value without notice, that should be accepted, and no evidence should have to be provided that that is the case?

Dominic Grieve: No, I am not saying that. After all, if the director considers that a person is in possession of property, but it has been obtained bona fide without notice of its origins, the director would be stupid to bring those proceedings in the first place. If, on the other hand, he doubts that, nothing that I am suggesting would prevent him from bringing the proceedings. The difference is that at the end of the proceedings, under the existing wording, the bona fide purchaser will be held to have property that was the result of unlawful conduct, but he will be able to escape recovery by virtue of clause 306. I am simply saying to the Minister that that is an odd argument.

Bob Ainsworth: If the director is easily satisfied that someone is a bona fide purchaser for value, the proceedings will not get very far. The hon. Gentleman appears to be suggesting that his amendment contains a protection that is not already in the Bill. I cannot see that.

Dominic Grieve: There are two issues. I touched on amendment No. 380, which was aimed at limiting the scope of recovery to assets in the hands of an individual, that had been obtained by his conduct. That would narrow the scope of civil recovery considerably. I said to the Minister that I was wholly open to persuasion not to press the amendment, although the Committee should consider it as we go along the road. It would remove the difference between the civil recovery and the confiscation proceedings, because the issue would be identical. The point about which the Minister wrote to me in relation to amendment No. 356 would therefore be covered.
 Leaving that to one side, even if we are to continue with the principle that proceedings can be brought against any property that is the result of unlawful conduct, should we not exclude the category of individual who has property in his possession that he has obtained bona fide without notice and for value? As I said to the Minister, this is ultimately a question about the approach that is being taken. We are giving the state a wide power of recovery. I accept the suggestion that there is a similarity with tax and VAT. The provision will not put the state into the same position as the victim of a tort. It gives it an administrative power to seize assets. 
 I am anxious about including a power that allows the state to treat assets that have been legitimately acquired for value by a person as the proceeds of unlawful conduct. That theoretical principle is objectionable, but it can be cured. The Under- Secretary said, ''Why change it, in view of clause 306?'' but if he is right, it is equally arguable that my amendment would in no way damage the ability—[Interruption.] The Minister of State chuckles, but the way in which Parliament drafts Bills is relevant in showing our intentions, and whether we approach matters fairly.

Ian Lucas: I am grateful to the hon. Gentleman for giving way. He has been very tolerant this morning. Would not the amendment to subsection (1) stop recovery by a third party against a third party? Let us suppose that a son was given money by his drug-dealing father. The amendment does not mention the concept of bona fide value without notice. It would effectively prevent the state, through the Assets Recovery Agency, from proceeding against any third party.

Dominic Grieve: If the hon. Gentleman is referring to amendment No. 381, I disagree with him. The son of a drug dealer who is handed money is not a bona fide purchaser for value without notice of that money. That clearly does not apply.

Ian Lucas: I am referring to amendment No. 380.

Dominic Grieve: Yes, on that amendment, the hon. Gentleman is right. That is why I stressed that amendment No. 380 was purely a probing amendment. My intention was to stimulate discussion about whether we were satisfied that the scope of the powers of recovery should extend beyond the unlawful conduct of the person against whom the proceedings are being brought. I may be easily persuaded that it should. I hope the hon. Gentleman will appreciate that I would not be doing my job unless I pointed out to members of the Committee what we are doing, particularly in the light of our discussion about the difference between confiscation and civil recovery. Although there is the power over tainted gifts, and confiscation would come into that category—

Bob Ainsworth: Aha.

Dominic Grieve: Yes, but tainted gifts would be covered anyway through confiscation. If I understood the hon. Member for Wrexham correctly, he was speaking about a person who might innocently have been given the money. That situation would not be covered by the tainted gifts provisions. I do not claim universal wisdom in these matters, and if I have got that wrong, the Minister will correct me. I tabled amendment No. 380 to stimulate discussion about whether we should limit the power because of its extensive nature. When I tabled the amendment I had no intention of pressing it to a Division. I wanted it to provide the opportunity to discuss the issue.

Paul Stinchcombe: I do not support amendment No. 381, because clearly its content is covered by clause 306. I do not agree with amendment No. 380, either, for the reasons explained by my hon. Friend the Member for Wrexham, but I am glad that it was tabled, as a probing amendment, because I simply do not understand what is meant by the words
''whether his own conduct or another's''
 in subsection (1). I should like clarification of that. If those words were deleted by the amendment, the clause would make perfect sense, although it would cast its net too narrowly. The subsection would then read: 
''A person obtains property through unlawful conduct if he obtains property by or in return for the conduct.''
 The subsection identifies the person rather than the property. It is manifest that the property would have to be obtained by the person mentioned at the beginning of the clause. 
 The subsection makes no sense to me when the parenthesised phrase is included. If the Minister wishes to cast the net sensibly so that the clause embraces property possessed by one person but obtained through the unlawful conduct of another, subsection (1) should be reworded. It could, perhaps, say something like: 
''A person obtains property through unlawful conduct if he possesses that property and it was obtained by or in return for unlawful conduct, whether that is his own conduct or another's.''
 The subsection must be reworded if it is to make sense.

Dominic Grieve: I am grateful to the hon. Gentleman for sharing my view that the clause is difficult to follow. That is why I tabled an amendment that would remove part of it. By removing the phrase in parentheses, we would probably limit the ability to recover property from those who had obtained property through unlawful conduct. The hon. Gentleman may agree that the issue highlights the slight ambiguity about the unwillingness to spell out the wide range of the power.
 It would be much better if the Minister rewrote the subsection to make it clear that we are dealing not just with people who obtain property by unlawful conduct, but with those who happen to have in their possession property that was originally obtained by unlawful conduct, although no taint attaches to them for having that property.

Paul Stinchcombe: I agree. It seems clear that if we exclude the words in parentheses the subsection would make perfect sense, but the sense would be narrower than that intended by the Government. I am not coy about that. I, too, would like the words to bear the meaning that the Minister intends them to have, and would like the meaning to be broader, and I am not afraid to say so. The present wording does not make that meaning clear.
 The subsection has a tension within it that I do not follow. I therefore suggest that we use my wording, or alternative wording drawn up by the Minister with parliamentary counsel and draftsmen. As a lawyer, I do not understand the subsection, and it seems inconsistent.

Vera Baird: I do not agree with my hon. Friend that the subsection does not make sense, although I am not far from agreeing. It is possible to understand that
''A person obtains property through unlawful conduct (whether his own conduct or another's) if he obtains property by . . . the conduct.''
 I could obtain property through the unlawful conduct of another, so the passage can be construed rationally. I fear that if we attempt to redraft the passage, we shall lose a power, albeit one that is likely to be used extraordinarily rarely, which should remain in the Bill. 
 I did not follow what the hon. Member for Beaconsfield said about the stigma that someone who has not done anything unlawful would feel if they were found to hold unlawfully obtained property. There may have to be some technical fine-tuning, but an innocent person can hold property acquired by unlawful conduct. If the judge finds that the defendant is a bona fide purchaser for value or a bona fide recipient who has acted relying on his bona fide belief, he will make that clear. 
 The unlawful conduct is not that of the Mr. Big whom we are considering. Anyone who is concerned can be reassured by the Minister's clear utterances that the priority would always be to prosecute and to use confiscation proceedings. The person who behaved unlawfully and obtained the property before transfer to the innocent third party would be prosecuted if possible, and presumably, the civil recovery avenue would be taken only if that person was dead or could not be pursued for another reason. 
 It seems to me that that is important. If a uniquely precious item, such as a valued picture from the national gallery, had passed through dishonourable channels into innocent hands, it would be right that there was the power to restore it to the nation, if that was practicable. It does not make sense to cut off the power even to try the issue of whether it came into a third party's hands in a bona fide manner. I do not support the amendment. 
 I apologise to you, Mr. Gale, and to the Committee, for my late arrival today, especially as I participated in yesterday's debate, and was undoubtedly referred to disparagingly in my absence.

Norman Baker: I am equally sorry that the hon. Lady was not present at the beginning because her contributions are welcome in this Committee, as they are elsewhere. I draw no connections between her absence and the fact that her ministerial colleague did not agree with her comments.

Vera Baird: The Victoria line was to blame.

Norman Baker: There can be few objections to amendment No. 381 as drafted. However, I ask whether the hon. Member for Beaconsfield allowed for a situation in which a person had not taken reasonable steps to determine whether property was obtained legally. There should be a test to determine whether the purchaser simply assumed that property that came into his or her possession was bona fide. If people asked questions before purchasing items, that would be a defence.
 The question is whether the provision suggested by the hon. Member for Beaconsfield is covered elsewhere in the Bill. There is an argument about whether it should be in this clause. One could argue that a clause with the heading, ''Property obtained through unlawful conduct'', was the correct location for the inclusion of any provision covering reasonable defence, rather than later in the Bill. Nevertheless, if the provision is in the Bill, it is in the Bill. 
 When the Minister responds, he must explain the difference between the amendment and the provisions in clauses 306 and 267, to which I referred earlier. The hon. Member for Beaconsfield is correct to say that one must read paragraphs (a) to (d) of clause 267(4) together. In the light of that, I want the Minister's assurance about what clause 267(4) means, so that I can assess whether the amendment is necessary. Will the Minister explain the meaning of clause 267(4)(b) so I can understand the impact of it? Clause 267(4) states: 
''The conditions referred to in subsection (3)(a) are that . . .
(b) he took steps after obtaining the property which he would not have taken if he had not obtained it or he took steps before obtaining the property which he would not have taken if he had not believed he was going to obtain it''.
 I will be grateful if the Minister clarifies what that means and why it is in the Bill.

Alistair Carmichael: I am delighted that the hon. Member for Wellingborough (Mr. Stinchcombe) cannot understand the drafting of clause 247(1). I had the same problem. I generally approach these matters from the point of view that I am probably being stupid. However, now I know that someone who was a counsel before he entered the House does not understand it either, and I am emboldened by that. I also agree with my hon. Friend the Member for Lewes that clause 267(4)(b) would not be out of place in a script for ''Yes, Minister''.
 However, I do not agree with my hon. Friend that amendment No. 381 relates to the wrong clause. This is the proper place for such an amendment and, compared with the terms in which later provisions are couched, it has a certain elegance. I also commend its succinctness. It does not conflict with subsequent provisions, and relating it to clause 247 would send out the signal that the Government, in proposing the legislation, take seriously the rights and concerns of innocent third parties. 
 The hon. Member for Redcar made a point about a portrait taken from the national gallery. That matter could be dealt under existing provisions for the determination of the ownership of property, which in Scotland is called an action for multiple poinding. There is another force behind the tabling of the amendment. Actions for multiple poinding are horrifically complicated and always messy. Reference was made earlier to a stolen car, and I can think of at least two authorities on Scottish law on stolen property, one of which relates to a stolen car, which give completely contradictory conclusions. We stand to have better law if we do everything possible to prevent people from having to start that sort of action in the first place.

Bob Ainsworth: I apologise, Mr. Gale, and accept your earlier request. My officials do not know about the vagaries of the parliamentary postal system or the different arrangements for redirection, and I should have made sure that copies of my letter were available in the Committee as well as sent out to people. I will seek to do that.

Roger Gale: I meant no criticism of the Minister. I received my copy on the Board late last night. The problem is that when material goes on to the Board, it goes into Members' internal post and they do not always get it straight away. I take this opportunity to tell Members who have asked for their copies to be sent over that I propose to suspend the Committee for five minutes when the letter arrives, so that those who have not had a chance to read it can do so.

Nick Hawkins: On a point of order, Mr. Gale. It may be helpful to mention that after our original discussion about post, and while other hon. Members were speaking, I received another letter, which is addressed to the Institute of Chartered Accountants in England and Wales and dated 11 December. I do not know if other hon. Members received that letter. Fortunately, it does not deal quite so directly with some of the matters to which earlier amendments relate, but with issues that relate to clause 247. The same principles therefore apply.

Roger Gale: The point is taken, and the Minister has generously acknowledged that something went wrong on this occasion, in spite of his best endeavours. I hope that the Committee accepts that. I will suspend the Committee when the copies of the letter arrive.

Bob Ainsworth: We will try to guard against such a thing happening again.
 I am starting to have profound worries about the direction in which my mind is beginning to work. I am starting to regret that I never had the opportunity to take up a career in law.

George Foulkes: No, no, no.

Bob Ainsworth: I have spent 20 years of my adult life missing out on all this fun—and the fact that I am finding it fun is beginning to worry me greatly.

Alistair Carmichael: The Minister's regrets are entirely misplaced. If he thinks that life in legal practice is so great, he may wish to ponder why so many of us have chosen to enter Parliament.

Bob Ainsworth: I think that I have made my point.
 I want to make a couple of general points about the thrust of the contribution by the hon. Member for Beaconsfield. First, these matters are fiendishly complicated, even for someone with legal training, and he should not become over-obsessed with the order in which different clauses appear in the Bill. The mere fact that clause 306 is some way down the list of clauses is not significant. It is entitled ''General exceptions'' and it clearly applies to the powers in part 5. The fact that it appears in another place does not diminish the safeguards within it. The hon. Gentleman sometimes appears to suggest that it does, and that if it were brought further forward within the Bill, that would change something. Surely he accepts that that is not the case.

Dominic Grieve: The Minister is right. I suppose I am fighting a battle against a sort of thought process that seems to suffuse the Government. A discussion of the way in which the Government approach legislation and its theoretical underpinning would be worth while. Something about the theoretical underpinning of part 5 gives me cause for anxiety. The amendment would remove some of that anxiety by restating clearly a category of individuals who are excluded from the bite of the legislation.

Bob Ainsworth: But that category is excluded under clause 306, the heading of which is ''General exceptions''. It states that bona fide purchasers for value are excluded. I do not know how to make the wording different, and I do not see how status can be derived from the position of the clause in the Bill. It is clear that bona fide purchasers for value are excluded.
 The hon. Gentleman tried to say that there was a huge contrast between the powers in part 5 and those in part 2. Later in his contribution, he spoke about tainted gifts, but suggested to the Committee that innocent recipients of tainted gifts could not be pursued under part 2. That is not the case. Clearly, such innocent recipients can be pursued under part 2, as he now acknowledges. The huge contrast that he said that there was between part 2 and part 5 does not exist. Part 5 is about civil proceedings, and part 2 is about criminal proceedings. However, innocent recipients of tainted gifts will be pursued, under part 2 powers, as well as, potentially, innocent recipients of the proceeds of crime, under civil recovery.

Dominic Grieve: I accept that I may have expressed myself badly in response to the intervention by the hon. Member for Wrexham. However, the Minister's helpful letter to me, the relevant passages of which I read out, highlighted areas in which it was possible to recover under civil proceedings property that it was not possible to recover under confiscation provisions. The Minister must accept that, because he wrote the letter. He will remember it especially because I wanted to ask, by means of amendment No. 356, whether we should prevent recovery through civil proceedings. The Minister argued that we should not do that precisely because the powers were wider than those under the confiscation provisions.

Bob Ainsworth: The hon. Gentleman is right: we were chasing down a particular situation, in which he was suggesting—as he suggested on his previous amendment, on which we have not yet voted—that the director should not in any circumstances be allowed to pursue property under part 5, if he had failed for any reason to confiscate under part 2. He is right: there is a potential contrast. Such circumstances would be rare. However, the thrust of my letter was that such action should not be ruled out all together.
 Clause 247 defines a key concept in civil recovery and cash forfeiture, which is what is meant by property that has been obtained through unlawful conduct. Amendment No. 380 would remove from subsection (1) the bracketed words, 
''whether his own conduct or another's''.
 I hope that my hon. Friend the Member for Wellingborough will forgive me for saying that although his legal mind may be more forensic than mine, I have heard those arguments for more than 10 years. When examining drafting proposed by parliamentary counsel, some have suggested that the draftsmen should be dragged over here and, if they cannot explain themselves, should be shot in front of the Committee. I am more than happy for officials to discuss with parliamentary counsel whether clearer alternative wording would provide exactly the same effect, but, I do not necessarily have the ability to go down the obscure road of the drafting of the clause, rather than its substance.

Paul Stinchcombe: I thank the Minister. I understand his explanation of the clause, but I do not understand the clause itself. Perhaps he can take up my argument with his officials. I do not understand how someone can obtain property by the conduct of someone else, nor how someone can obtain property through the unlawful conduct of someone else.

Bob Ainsworth: We will have to discuss the policy implications, and I shall explain what is and what is not recoverable. Notwithstanding whether my hon. Friend accepts the thrust of the policy, we shall consider whether the wording could be improved without changing the meaning.
 Removing the phrase would remove the certainty currently provided about the application of the definition of property acquired by a person by, or in return for, another's unlawful conduct. Although the exclusion of those words would not of itself mean that the benefit of another's unlawful conduct would necessarily be excluded from the definition, the fact that the phrase had been removed would be taken as a clear signal as to interpretation by the courts.

Nick Hawkins: The Minister used the central and crucial phrase, ''acquired in return for another's unlawful conduct''. That gives us a clue to the draftsman's intention. We are talking about an exchange and obtaining property in return for someone else's unlawful conduct. That is not what the clause states, which underlines how helpful it was that the Minister said to the hon. Member for Wellingborough that he would consider with his officials whether the clause needed redrafting. The clause would not do what the Minister said.

Bob Ainsworth: I actually said, ''by, or in return for, another's unlawful conduct''. However, that point having been accepted, I do not know to what extent the Committee wants to labour it.
 The hon. Member for Beaconsfield rightly referred to the width of the policy, and asked whether it should be that wide. Amendment No. 381 would add a new subsection to clause 247 to make it clear that a bona fide purchaser for value cannot be held to have obtained their property through unlawful conduct. The effect of that is unclear. As I mentioned in an intervention, a bona fide purchaser for value cannot come within the terms of clause 247(1). Therefore, the amendment proposes a redundant provision, unless the hon. Gentleman is suggesting—as I thought he was, at one point—that we should not even be allowed to contemplate taking action in such circumstances. That would mean that there could not even be an examination of whether the property was obtained for full value.

Dominic Grieve: I want to restate that the legislation was not intended to have in its sights, in any way, the bona fide purchaser for value without notice. With regard to that, although I accept that clause 306 is a let-out clause, I want the Minister to state that such a purchaser is not the target. That would not disallow an examination of whether someone was a bona fide purchaser: an allegation of theft can be made against someone who is subsequently acquitted, but that does not mean that the decision to prosecute him was fundamentally flawed or wrong.
 The amendment would highlight at an early stage of part 5—rather than at the end of it—the fact that bona fide purchasers cannot be targeted. Such people should not be held to have obtained property through unlawful conduct.

Bob Ainsworth: The hon. Gentleman is suggesting that we should not be allowed to explore such matters—unless he is making a minor point about where in the Bill the reassurance should be placed. I draw his attention to clause 302, which states:
(1) Property obtained through unlawful conduct is recoverable property. 
 (2) But if property obtained through unlawful conduct has been disposed of (since it was so obtained), it is recoverable property only if it is held by a person into whose hands it may be followed. 
 (3) Property may be followed into the hands of a person obtaining it on a disposal by— 
 (a) the person who through the conduct obtained the property, or 
 (b) a person into whose hands it may (by virtue of this subsection) be followed.
 The intention of that is clear. Power will be given to follow the trail of the unlawful property. I shall offer an example. After a big gold bullion robbery, the nature of the recoverable property might change many times, and it might pass through many different hands. The director will have to be able to follow the trail of that property as it changes from gold, to cash, to property—and, perhaps, back to cash. If he comes across a bona fide purchaser for value, the trail will end. However, the transaction that passed the property to that purchaser might have produced profits, and they are the proceeds of crime. Those profits might remain in the hands of the seller, or they might have been passed on to someone else. In that case, although one trail has ended, another will have opened up.

Dominic Grieve: I understand that, but we are dealing with an action against an individual. Ascertaining that the individual is a bona fide purchaser for value without notice may flag up for the director the fact that another person should be the target of his activities. I do not disagree with that. However, if he has brought full proceedings for recovery, he will have been aiming at the wrong target.

Bob Ainsworth: The director will not bring full proceedings. It will become apparent in the course of his investigations if the person is a bona fide purchaser for value—unless the person involved is hell-bent on ensuring that that does not come to light, in which case it is possible that full proceedings may follow, in which the defendant reveals in court how he obtained the property and embarrasses the director.
 It would be in the director's interests for the issue not to go to court, but quickly to discover whether there is a defence and to try to trace the proceeds of crime through other avenues. The proceedings will involve individuals, but the question is how many individuals and what proportion of the profits is involved, in what form the property now exists and whether it is worth pursuing through the civil recovery procedures. That is what the director must find out. Ultimately, having traced all the roots and branches of the tree relating to the original criminal offence, the director must decide whether to take action, how many individuals are involved and how many individuals it is worth taking through the civil procedures in order to acquire the various proportions of the profits of that criminality. 
Mr. Mark Field (Cities of London and Westminster) rose—

Roger Gale: Order. I have taken note of the fact that the hon. Member for Cities of London and Westminster (Mr. Field) wants to intervene, but I hope that now is an appropriate time to suspend the Committee. The letters quoted at the start of the debate have arrived, and the other letters referred to are on their way. I am not so worried about those, but I am worried that hon. Members may not have had the opportunity to read the letter from which the hon. Member for Beaconsfield quoted. I therefore propose to suspend the Committee until 10.50, to give every hon. Member an opportunity to have a look at the letters.
 Sitting suspended. 
 On resuming—

Bob Ainsworth: I was about to respond to the point made by the hon. Member for Lewes, but as he is not here now, I shall leave that until later.

Alistair Carmichael: Go on.

Bob Ainsworth: All right. The hon. Member for Lewes wanted me to talk about how clause 267(4) works. He originally had the impression, suggested by the hon. Member for Beaconsfield, that clause 267 included a widely cast safeguard, but he picked the fact up that that was not so. In order to explain the safeguard that clause 267 provides, we must continue to talk about how the investigation chases the property throughout its various transformations.
 A person may receive property, albeit not at full value, and be innocent of its origins. As a result of receiving that property, he may take actions that he would not otherwise have taken. He might make commitments or investments, or decide to go on a world tour that he could not otherwise have afforded. In those circumstances, an evaluation should be made, and the person should be protected to some degree, because he took action that he would not have taken if he had not received the property. 
 Real injustices might arise if an innocent recipient of criminal property were told, ''You have to give it back. We don't care what you did in the meanwhile, or what effect it may have on your life.'' I hope that that answers the question raised by the hon. Member for Lewes, and explains the reason for clause 267 and the safeguards that it provides.

Dominic Grieve: The Minister may agree that clause 267 provides, in the case of civil recovery, the protection that the Glasgow granny did not have under the confiscation proceedings for tainted gifts.

Bob Ainsworth: There are, as the hon. Gentleman knows, safeguards in part 2 that guard against serious injustice.
 We think that clause 267 is appropriate. Someone may be able to present his circumstances to the court as I have outlined, and the court should be allowed to consider whether it is right to continue to pursue the property. 
 I have tried to pick up on the main issues, which are important because of the centrality of the clause to part 5. I shall explain clause 247, for the record, and allow people to raise issues about the origin of the proposals in it. The clause makes it clear that a person may obtain property through unlawful conduct in two ways. The first is if the property is obtained directly through unlawful conduct. That would be the case if the property were stolen or obtained by dealing in illicit goods. The second is if the property were obtained in return for unlawful conduct. For example, if a person is paid to commit murder or arson, or takes a bribe—or even a wage, in the case of some organised criminal gangs—to give false evidence, he has effectively obtained that money through unlawful conduct. The clause makes it clear that it is immaterial whether the person committed the conduct, or whether it was committed by someone else. That is important because of the nature of criminal networks. It is especially relevant in the context of property obtained in return for unlawful conduct. The head of a criminal gang might agree to arrange a hit for a fee. If he then got one of his gang members to commit murder, it is clear that he obtained the fee in return for the criminal conduct of the gang member who carried out the murder. A slightly different example would be a person who agreed to undertake a hit and arranged for the fee to be paid to his wife, his mother or his mistress. 
 I assure the Committee that the definition in clause 247 applies only to a person who obtains property by or in return for unlawful conduct, whether that conduct is his or someone else's. It cannot apply to a bona fide purchaser for value. Such a person will not have obtained property by or in return for unlawful conduct. However, part 5 allows for the possibility of recovering property from people who were not themselves involved in the unlawful conduct. 
 Chapter 4 of part 5 makes explicit provisions as to how property that is obtained through unlawful conduct may be followed. I read out clause 302 for the hon. Member for Beaconsfield because it details why that may be necessary and the requirements for doing it. I assure the Committee that clause 306 sets out exceptions when property cannot be followed into the hands of another. It is clear that if a person obtains property in good faith for value and without notice that the property was recoverable, the property is not recoverable. Therefore, the Bill already provides the protection that the hon. Member for Beaconsfield wants—at least, I am fairly sure that that is what he wants. 
 The hon. Gentleman has researched part 5, and he puts a lot of effort into his work. He compared the provisions in part 5 with tort. I want to ensure that he knows the origin of the provisions, for the benefit of his further investigations as we consider part 5. The scheme is based not on tort, but on property claims. A victim who has his property stolen may sue the person who possesses that property. That may be done regardless of whether that person is the thief. In ordinary civil cases brought by one individual against another, the defence of being of a purchaser for value could be used as we are providing for it here. That is the origin of the provisions in the Bill, rather than the tort provisions that the hon. Gentleman has studied. 
 I assure the Committee that I will examine the wording—although I will not necessarily bring the draftsman in front of anybody to be shot.

Paul Stinchcombe: The Minister's explanation has helped me considerably. I now have a much better understanding of the clause's meaning, and indeed, it means what it says.

Bob Ainsworth: Wow. At that, I had better sit down, after asking the hon. Member for Beaconsfield to withdraw the amendment.

Dominic Grieve: I compliment the Minister on the clarity of his exposition of the purposes of clause 247. He satisfied the hon. Member for Wellingborough and I can assure him that on that one, he also satisfied me. Moreover, I shall not press amendment No. 381 relating to the bona fide purchaser. The debate was helpful in producing clarity, but I am not completely reassured. I take the Minister's point about the origin being in a proprietary claim, but as he acknowledged, one of the features of the legislation is that the assets in question were never necessarily the property of another person that had been unlawfully taken. The category of unlawful assets is much wider—an asset is unlawful because of its origins, and because it has been tainted with criminality.
 I suppose that, philosophically, I have an old principle of English law in mind whereby a person is entitled to possession of what he has unless somebody else can raise a better claim to it, or it is the proceeds of crime, or, more specifically, a criminal acquisition. Departing from that, under an administrative law framework, throws up anomalies between the old established rule, which is valuable and touches on the liberty of the individual, and the convenience of the state in seizing assets that it concludes are the proceeds of unlawful conduct. 
 That is why I was anxious about the position of the bona fide purchaser as a theoretical individual. Even with the protections offered by the Minister, once one starts to suggest that the bona fide purchaser is a person who has unlawfully acquired assets, an interesting and worrying theoretical dimension is introduced in relation to the nature of property and private property rights. I noticed with interest that whoever drafted the legislation was sufficiently worried to make a specific statement about the impact of the European convention on human rights. When we come to the relevant part of the Bill, the Minister will see that it raises interesting issues in connection with private property rights. Of course, the ECHR originated from English legal principles, before it was exported to Strasbourg and subsequently repatriated—some Committee members may know that its repatriation was not wholly unwelcome to me. 
 I accept, however, that the Bill contains protection for the bona fide purchaser. I am grateful to Committee members for having borne with me during this wide-ranging discussion, and I hope that it will colour some of the debate on subsequent clauses. Therefore, without having such an extensive debate, we can keep in mind the potential tension and conflict between the two principles when considering later amendments. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill. 
 Question agreed to. 
 Clause 247 ordered to stand part of the Bill.

Clause 248 - Proceedings for recovery orders in England

Dominic Grieve: I beg to move amendment No. 382, in page 146, line 7, at end insert—
'(1A) All proceedings for a recovery order in the High Court shall take place in chambers.'.

Roger Gale: With this it will be convenient to take amendment No. 383, in clause 249, page 146, line 21, at end insert—
'(1A) All proceedings for a recovery order in the Court of Session shall take place in chambers.'.

Dominic Grieve: We now move on from general principles to the mechanisms of civil recovery. Those are set out briefly in clause 248 in relation to England and Wales, and in clause 249 for recovery orders in Scotland. Perhaps not surprisingly, not a huge amount is said about those proceedings. That raises immediately a point that I made on Second Reading about the potentially damaging nature of the proceedings for an individual's reputation. Amendments Nos. 382 and 383 state that all proceedings for a recovery order in the High Court and the Court of Session shall take place in chambers. The proceedings would therefore not take place in public.
 I shall outline briefly the pros and cons of a public—as opposed to a private—hearing. A key essential of our legal system is that justice should not only be done, it should be seen to be done. Thus the general rule is that litigation, whether civil or criminal, should take place in public. The public should have access to it. They should have the opportunity of hearing what is going on and of forming their own views about the case. Secret cases may create anxieties about unfairness, and that would be a serious issue. 
 However, it is also a well-established principle of our law that some proceedings should not take place in public. The classic example is the family division, when children are affected. To ensure that the children are protected, such proceedings are held in chambers. For the same reason, and more significantly, in a divorce case ancillary relief proceedings in respect of family finances are held in private, in chambers. I have considered various administrative tribunals and my understanding is that in the usual course of events, an appeal to the Inland Revenue commissioners, for example, would take place in private. Clearly, however, the situation might be different if the case subsequently went to the Court of Appeal. 
 I have an anxiety about the nature of the proceedings for civil recovery. Civil recovery, as the Minister has explained, is likely to take place when a person has never been convicted of an offence that would bring him within the confiscation mechanism. Such a person may enjoy, perhaps wrongly, a high reputation in society. He may be a wealthy man; he may make donations to charity and have an established status. Whether he is such a person or someone with a lower public profile, it has always been a central principle that people's private finances should not be exposed to public gaze without good and sufficient reason. One such reason is that when an individual brings an action against another person, it is often inevitable that matters of a personal nature may be exposed in the course of proceedings. However, a judge usually has mechanisms to ensure that any highly confidential material is not exposed to public gaze when a person can demonstrate that—although he is prepared to make it available to the court and to the other side—he would be seriously damaged by its public revelation. 
 As matters stand, unless subsequent rules were made to govern the proceedings, they would be held in open court. I am sure the Minister will agree that it is likely, when the first recovery order is brought—possibly against a Mr. Big—that there will be the type of knee-jerk feeding frenzy with which we are familiar in high-profile litigation. That would be interesting to a fairly prurient public, in terms not only of the outcome, but of finding out about the assets of others. I have an anxiety about that.

Alistair Carmichael: Amendment No. 382 states:
''All proceedings for a recovery order in the High Court shall take place in chambers''.
 Amendment no. 383 makes the same point with regard to the Court of Session. Does the hon. Gentleman agree that the drafting would have been better if the word ''shall'' had been replaced by the word ''may''?

Dominic Grieve: That is a good point. I considered whether I should use that word—or whether I should insert some qualifying subsections, because this can be approached in a variety of ways. If the Committee expressed a wish that the word ''may'' rather than ''must'' or ''shall'' should be used, I would not complain. However, I felt that there was no harm in being emphatic, because that can stimulate debate, and because I am mindful of the fact that it is unusual for a Minister to stand up and say that he accepts an amendment in its present form. I have never known that to happen. Ministers usually have to check matters with their officials, and the amendment has to be redrafted to conform with the thrust of the legislation.
 My emphatic drafting also helped me to develop my argument. The Minister has explained that in certain categories—although it will not be possible to be specific about them until the end of the proceedings—we will be dealing with entirely innocent people who have to hand over assets, and the court might also decide that certain individuals were right to contest a case, because they were entitled to establish why the assets that they believed to be innocently held were, in fact, illegitimately acquired by someone else—and that they were, therefore, the proceeds of unlawful conduct.

Mark Field: My hon. Friend has referred to the feeding frenzy of press coverage that prosecutions of high-profile Mr. Bigs might generate. Does he agree that that might be one of the Government's motivations, and that negative consequences might flow from it?

Dominic Grieve: The Minister has made it clear that the Government intend the legislation to have a deterrent effect. The prospect of a Mr. Big being taken through such a civil procedure—with the attendant publicity, and the possible revelations about his lifestyle and other things—might act as a powerful form of deterrence, by highlighting the reach of the state, and its power to grab people and expose their lives to public gaze. In fairness to the Minister, I do not think that that was discussed when the Bill was drafted—I think that it was overlooked.
 However, the Minister might agree that it is noteworthy that during our proceedings, the hon.—and, I think, learned—Member for Redcar has commented on the public nature of those proceedings. I think that she remarked on that last Tuesday—although I cannot be sure of the date, as I have not yet received the relevant copy of Hansard. Other hon. Members have also touched on the subject. 
 The reverse of what I said before is also true. To argue against my amendment, I admit that an individual might demand a public hearing, because he wanted to shame the director by exposing the folly of his course of action to public gaze.

Nick Hawkins: If the main purpose of the amendments were accepted by the Government, they could table further amendments. For instance, an exception could be introduced, to enable someone who wished to expose the director to the full glare of the public gaze to make an special application for a public hearing.

Dominic Grieve: That is right. When the hon. Member for Orkney and Shetland asked how I might have redrafted the provision, the amendment that sprang to mind was
''unless the person involved requested a public hearing''.
 The danger of the discretion allowed by the word ''may'' is that it could lead to lengthy disputes about whether a case should be held in chambers. I need to be persuaded of the merits of public hearings. No doubt we shall hear from the Minister about that, but that is my starting point. 
 If my understanding of the Government's policy is correct, it is probable that civil recovery will be used against individuals with substantial assets and substantial business interests. I would imagine that such a person would fit neatly into the category, especially as the Mr. Bigs—those who have escaped prosecution—are often wealthy individuals who may have a range of legitimate and illegitimate business interests. One hears about such people anecdotally. Every now and again one has the pleasure of hearing that one or two of them may be in the process of being brought to book, and it is reassuring when that happens. 
 It is likely, given the nature of human affairs, that the proceedings may turn out to have been wrongly aimed, however good and fair the director may be. I worry that such proceedings could have catastrophic consequences for an individual's reputation or business—and, in some circumstances, on his physical safety. I had experience as a lawyer of a case that involved allegations of a fraudulent nature. One of the interesting aspects was that one of the key witnesses, who, having tried to avoid coming to court, finally had to be brought to court, was a business man with business interests both in this country and in another country whose democratic credentials were not well established. It became clear in the course of my cross-examination that his financial transactions, although they involved Lichtensteiner Anstalt and other devices, might be said to have related not so much to criminality in this country as to avoiding the arbitrary and capricious laws of the country from which he originated, and in which he continued to have business interests. 
 The Minister will appreciate that in some circumstances the full revelation of such facts in proceedings involving someone who is justifiably trying to defend an action against him might not only damage his business reputation in this country but place him at risk elsewhere. How might we tackle that? It is a difficult issue but, as the hon. Member for Orkney and Shetland said, at least allowing for the possibility of hearings in chambers would be appropriate. 
 Even under my amendment, according to which proceedings would have to take place in chambers, I would be perfectly content if it were suggested that in the event of success, a full judgment should subsequently be made available to the public. I have no anxiety about that. However, I worry that the cases involved are likely to have a high profile. The Inland Revenue commissioners maintain confidentiality, but in this case that will not apply. As the Minister accepts, the people involved may have no criminal convictions. The Committee must deal with that. I should be interested to hear Committee members' views on how the matter should properly be tackled.

Nick Hawkins: My hon. Friend the Member for Beaconsfield has already thoroughly set out the reasons why he and I, and perhaps other members of the Committee, think that we need to have the proceedings in chambers, and he gave us examples from his own practice. I can helpfully alert the Committee with examples from my professional practice over the years before I came to the House.
 Like my hon. Friend, I was involved in various cases, both prosecuting and defending, in which there were allegations of such crimes as fraud. I am sure that Government Members have similar experiences. One encounters cases in which people operate on the fringes of legality. Even if they have legitimate businesses, they may deal with criminals. Such people are often in fear of their lives because although they may not act criminally, they have unwisely got into an area of business—especially international finance—in which they deal with very unpleasant people. 
 One of my jobs in my previous practice involved me with legitimate financial institutions that had to decide whether to give authority to the—later infamous—Bank of Credit and Commerce International to issue credit instruments under internationally recognised logos and arrangements. I am glad to tell the Committee that I recommended that no authority should be given to BCCI to legitimise their operations. Even though the investigations occurred some years before BCCI became notorious, they made us aware that there were question marks—to say no more—over some of its operations. 
 That reminded me that those who operate on the fringes of the law often find that they are intimidated by criminals who are involved in organised racketeering, and pressure can be brought to bear on people who hold legitimate jobs in legitimate financial institutions. There was worry about BCCI at an early stage because suggestions were floating around the financial sector in the City of London that such intimidation may have occurred in the middle east and the subcontinent. 
 If one prosecutes in the criminal courts and talks to special branch officers who say that there are times when organised criminals will actively try to threaten people involved in legitimate business life or legitimate public life, one is bound to worry about the consequences for a person who is innocent and who would not themselves be properly proceeded against by the director. In order to protect people who may be innocent, such matters should be dealt with in chambers. 
 I was reminded of this in my parliamentary work last year. In my then role as shadow spokesman on the Lord Chancellor's Department, I visited my regional headquarters of the Crown Prosecution Service. I know that the Minister's predecessors in the Home Office and the Lord Chancellor's Department were keen for all hon. Members to have closer links with their local Crown Prosecution Service. I talked to a senior official in my regional headquarters, and I was taken aback to learn that the reason why he moved there was because during his previous job in government service, he and his family were targeted by organised crime. It would not be right or sensible to go into greater detail, but if senior people in government service have been put under such pressure in the past 12 months, Government Back Benchers and others can understand the importance of reinforcing the need for proceedings to be held in chambers.

Roger Gale: In the light of observations made at the start of the sitting on a point of order, hon. Members may wish to know that during this morning's sitting, I have received a most courteous letter from the Deputy Editor of the Official Report apologising for the fact that the proceedings of Tuesday afternoon's sitting were not available at the start of this morning's sitting. That was due to an error at the Stationery Office, and the Deputy Editor assures me that the Official Report will be available as soon as possible.
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.